Thank you very much Guido and thank you very much for hosting us here in the German House. I am pleased to serve as co-chair alongside you and Minister Rassoul. I am joined by a delegation of senior officials from across the United States government, including the Under Secretary of Commerce, USAID, and the White House.

I want to echo Guido’s condemnation of Professor Rabbani’s assassination.

We have always known there are those who will do all they can to undermine the cause of peace and reconciliation and we will surely see more violence before this is over. But I am confident that the Afghan people will not be deterred from seeking a more peaceful, stable, prosperous Afghanistan. And the international community must continue to stand with them and support their efforts – including the work of the High Peace Council.

In previous meetings, our discussions have focused largely on the on-going coalition military campaign against al-Qaida and the Taliban, and on the political strategy we hope will end the conflict and chart a more peaceful future for the entire region. This does include a reconciliation process based on clear red lines, which Professor Rabbani was leading; regional buy-in, with firm pledges from all of Afghanistan’s neighbors to respect its sovereignty and territorial integrity; and enduring commitment from the United States, United Nations and other multilateral organizations on behalf of the entire international community that we will not abandon Afghanistan or let it once again become a safe haven for terrorists.

Having said that, I am pleased that today we are turning to the economic side of the strategy. Because we all recognize that Afghanistan’s political future is linked to its economic future – and in fact to the future of the entire region. That is a lesson we have learned over and over again, all over the world – lasting stability and security go hand in hand with economic opportunity. People need a realistic hope for a better life, a job and a chance to provide for their family. And that is especially true in Afghanistan.

For political reconciliation to succeed, Afghans must be able to envision a more prosperous, peaceful future. That will take a lot of hard work, but I firmly believe it is possible.

Afghanistan needs a sustainable economy at home that is not dependent on international assistance, and that will require leadership from the government and investment from the private sector. But it is also clear, as it has been throughout Afghanistan’s past that it's economic future, like it's political future is bound up with the fortunes of the wider region.

For Afghans to enjoy sustainable prosperity, they will have to work alongside all of their neighbors to shape a more integrated economic future for the region that will create jobs and will undercut the appeal of extremism.

As I outlined in a speech that I gave this summer in Chennai, an Afghanistan firmly embedded in the economic life of a thriving South and Central Asia would be better able to attract new sources of foreign investment, connect to markets abroad and provide people with credible alternatives to insurgency. Increasing regional trade could open up new sources of raw material, energy, and agricultural products for every nation in the region.

For centuries, the nations of South and Central Asia were connected to each other and the rest of the continent by a sprawling trading network called the Silk Road. Afghanistan’s bustling markets sat at the heart of this network. Afghan merchants traded their goods from the court of the Pharaohs to the Great Wall of China.

As we look to the future of this region, let’s take this precedent as inspiration for a long-term vision for Afghanistan and its neighbors. Let’s set our sights on a new Silk Road – a web of economic and transit connections that will bind together a region too long torn apart by conflict and division.

Now, let me hasten to add that I am clear-eyed about the entrenched obstacles standing in the way. But I don't know what the alternative is. If we do not pledge ourselves to a new economic vision for the region, I do not think that a more prosperous future is as likely. Now I also realize that this long-term vision may seem detached from everyday concerns of Afghans. But I also believe it has the potential to drive tangible progress on the ground and make a difference in people’s lives.

Turkmen gas fields could help meet both Pakistan’s and India’s growing energy needs and provide significant transit revenues for both Afghanistan and Pakistan. Tajik cotton could be turned into Indian linens. Furniture and fruit from Afghanistan could find its way to the markets of Astana or Mumbai and beyond.

So how do we turn this vision into a reality? Well, starting today, and in the coming months at international meetings in Istanbul, Bonn, and Chicago, we will have the opportunity to think through the specifics.

First, in the short-term, we need to work together to support the Afghan people as they meet the economic and security challenges that come with transition from the military mission. As coalition combat forces leave Afghanistan, the support structure that has grown up to supply them will shrink dramatically. That will mean fewer jobs for Afghans and a loss of economic activity. So the Afghan economy will need new sources of growth independent of foreign assistance connected to the military mission. Today at the World Bank, many of our colleagues are discussing this challenge. We need to work together to support an achievable, Afghan-led economic strategy to improve agricultural productivity, develop Afghanistan’s natural resources in a way that benefits the Afghan people, increase exports and strengthen the financial sector, among other steps.

And as we head toward Bonn, I hope our partners will commit to reinvest a share of the so-called "transition dividend" achieved by drawing down combat forces back into Afghan-led economic and security efforts. We will work closely together with all of you in the coming months to develop a transparent and sustainable mechanism to identify and deliver assistance in a way that builds Afghanistan’s capacity.

The United States will continue shifting our development efforts from short-term stabilization projects, largely as part of the military strategy, to longer-term sustainable development that focuses on spurring growth, creating jobs, invigorating the private sector, and integrating Afghanistan into the South and Central Asia economy.

We also know that governments alone cannot possibly solve Afghanistan’s economic problems, so we have to work to create an environment that attracts private sector investment.

Just today we launched a new partnership to promote private investment in Afghanistan’s energy sector that will drive significant economic growth during the transition process and beyond.

As transition proceeds, Afghanistan and its neighbors can begin taking concrete steps toward developing a more sustainable Afghan economy and better connecting it to the rest of the region.

For example, upgrading the facilities at border crossings, such as what India and Pakistan are now doing at the Wagah Crossing. Fostering private sector investment in rail lines, highways, and energy infrastructure, like the proposed pipeline, the so-call (inaudible) pipeline to run from Turkmenistan, through Afghanistan, Pakistan and into India. This isn’t about grand infrastructure projects – it’s about promoting sustainable cross-border economic activity.

And it will require removing bureaucratic barriers and other impediments to the free flow of goods and people that currently stifle trade and cooperation.

We are very pleased to see Afghanistan and Pakistan implementing fully their historic transit trade agreement. I think this could be seen as a benchmark to extend to the countries of Central Asia. Indeed, several of Afghanistan’s Central Asian neighbors have already moved to implement similar transit trade agreements to the north. And we are very much looking forward to the meetings of India and Pakistan’s commerce ministers next week, along with their large private sector delegations.

All of these steps would have an immediate impact on economic activity and could help lay the foundation for true regional integration.

But let's be honest, any of this to be successful will require changes in attitude and a sustained commitment of political will. To attract more private investment, which is critical, the nations of the region need to offer lasting stability and security. That means as hard as it is, putting aside old enmities and rivalries, focusing on opportunities, not just threats. And, I would of course add, welcoming the full participation of women in the economic and political life of the region, which will add to unlocking the enormous untapped economic potential we see in the countries there.

At each step of the way down this road, in the short-, medium- and long-term, economic and political progress will be mutually reinforcing. Nations will not only enjoy the benefits of greater trade but they will also enjoy the benefits that come from working together. And we know that there has to be tangible improvements in people’s lives.

But I think it's about time we have something we can say yes to, not just no to. No to terrorism, no to extremism, no to insurgency. Yes, that is our message and has been for more than a decade.

But yes to economic integration, yes to closer ties between the nations of this region, yes to a better future for the people who live there.

When we meet again in Germany, I hope we are ready to formalize our specific support for this vision, and to welcome regional commitments that will have been made in Istanbul and to commit to the transition dividends that I think are so important. I look forward to working with all of you to realize the vision of the New Silk Road.